Marine Safety Fees Regulations: SOR/2021-59
Canada Gazette, Part II, Volume 155, Number 8
Registration
SOR/2021-59 March 29, 2021
CANADA SHIPPING ACT, 2001
P.C. 2021-217 March 26, 2021
His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Transport, pursuant to paragraph 35(1)(g)footnote a of the Canada Shipping Act, 2001footnote b, makes the annexed Marine Safety Fees Regulations.
Marine Safety Fees Regulations
Definitions
Definitions
1 The following definitions apply in these Regulations.
- Certificate of Readiness to Load
- means a certificate referred to in subsection 119(3), 128(2) or 140(3) of the Cargo, Fumigation and Tackle Regulations. (certificat de navire prêt à charger)
- Fitness to Proceed Certificate
- means a certificate referred to in subsection 120(2), 129(2) or 141(2) of the Cargo, Fumigation and Tackle Regulations. (certificat d'aptitude au transport)
- Minister
- means the Minister of Transport. (ministre)
Fees
Concentrates, Grains and Timber
Inspection
2 A fee of $616 is imposed on a vessel for each day that the Minister, following receipt of an application to issue a Certificate of Readiness to Load or a Fitness to Proceed Certificate to the vessel, takes one or more of the following actions:
- (a) inspects the vessel to establish that the requirements for the issuance of the certificate are met;
- (b) travels to or from the vessel;
- (c) is, at the vessel's request, made available for an inspection referred to in paragraph (a).
Issuance of documents after inspection
3 A fee of $834 is imposed on a vessel for each day that one or more of the following documents are issued to the vessel or given to the vessel's master:
- (a) the first Certificate of Readiness to Load issued to the vessel in respect of a cargo of concentrates, grain or timber prior to the vessel's departure from a port with the cargo;
- (b) a Fitness to Proceed Certificate;
- (c) a written statement referred to in subsection 119(5), 128(4) or 140(5) of the Cargo, Fumigation and Tackle Regulations.
Verification of Shipper's Procedures
Initial verification
4 A shipper who makes a request under paragraph 115.1(1)(a) or subsection 115.1(2) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,670.
Intermediate verification
5 A shipper who makes a request under paragraph 115.1(1)(b) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $835.
Renewal verification
6 A shipper who makes a request under paragraph 115.1(1)(c) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $835.
Inspections of Dangerous Goods at the Request of an Interested Person
Solid bulk cargo
7 An interested person who makes a request under subsection 116(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $750.
Packaged goods
8 An interested person who makes a request under subsection 162(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $750.
Tank Prewash Operations
Exemption
9 (1) If the master of a vessel requests an exemption from a tank prewash operation under subsection 63(2) of the Vessel Pollution and Dangerous Chemicals Regulations, a fee of $3,075 is imposed on the vessel for the first 3.75 hours or fraction of this time that a marine safety inspector requires to assess the request.
More than 3.75 hours
(2) If the marine safety inspector requires more than 3.75 hours to assess the request, the following additional fees are imposed on the vessel for time in excess of the first 3.75 hours:
- (a) $105 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector assesses the request from 8:00 a.m. to 5:00 p.m., Monday to Friday, other than on a holiday;
- (b) $307 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector assesses the request
- (i) before 8:00 a.m. or after 5:00 p.m., Monday to Friday,
- (ii) on a Saturday, or
- (iii) on a holiday, other than a Sunday; and
- (c) $336 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector assesses the request on a Sunday.
Tank prewash operation
10 (1) If a marine safety inspector is present for a vessel's tank prewash operation under subsection 63(5) of the Vessel Pollution and Dangerous Chemicals Regulations, a fee of $3,075 is imposed on the vessel for the first 3.75 hours or fraction of this time that the inspector is present.
More than 3.75 hours
(2) If the marine safety inspector is present at the tank prewash operation for more than 3.75 hours, the following additional fees are imposed on the vessel for time in excess of the first 3.75 hours:
- (a) $105 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector is present from 8:00 a.m. to 5:00 p.m., Monday to Friday, other than on a holiday;
- (b) $307 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector is present
- (i) before 8:00 a.m. or after 5:00 p.m., Monday to Friday,
- (ii) on a Saturday, or
- (iii) on a holiday, other than a Sunday; and
- (c) $336 per hour, calculated on a pro-rated basis for each quarter hour or fraction of a quarter hour that the inspector is present on a Sunday.
Inspections of Foreign Vessels
Inspection following detention order
11 If, on request by a foreign vessel's authorized representative, a marine safety inspector carries out an inspection of the foreign vessel for the purpose of verifying that measures indicated in a notice referred to in subsection 222(6) of the Canada Shipping Act, 2001 have been taken, a fee of $4,200 is imposed on the vessel.
Correction of deficiencies
12 If, on request by a foreign vessel's authorized representative, a marine safety inspector carries out an inspection of the foreign vessel for the purpose of verifying that deficiencies identified in relation to a requirement under section 18 or 19 of the Vessel Safety Certificates Regulations that did not warrant the issuance of a detention order have been corrected, a fee of $1,870 is imposed on the vessel.
Amendments to these Regulations
13 The portion of section 2 of these Regulations before paragraph (a) is replaced by the following:
Inspection
2 A fee of $682 is imposed on a vessel for each day that the Minister, following receipt of an application to issue a Certificate of Readiness to Load or a Fitness to Proceed Certificate to the vessel, takes one or more of the following actions:
14 The portion of section 3 of these Regulations before paragraph (a) is replaced by the following:
Issuance of documents after inspection
3 A fee of $923 is imposed on a vessel for each day that one or more of the following documents are issued to the vessel or given to the vessel's master:
15 Sections 4 to 6 of these Regulations are replaced by the following:
Initial verification
4 A shipper who makes a request under paragraph 115.1(1)(a) or subsection 115.1(2) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $2,070.
Intermediate verification
5 A shipper who makes a request under paragraph 115.1(1)(b) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,035.
Renewal verification
6 A shipper who makes a request under paragraph 115.1(1)(c) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,035.
16 Sections 7 and 8 of these Regulations are replaced by the following:
Solid bulk cargo
7 An interested person who makes a request under subsection 116(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,125.
Packaged goods
8 An interested person who makes a request under subsection 162(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,125.
17 The portion of section 2 of these Regulations before paragraph (a) is replaced by the following:
Inspection
2 A fee of $750 is imposed on a vessel for each day that the Minister, following receipt of an application to issue a Certificate of Readiness to Load or a Fitness to Proceed Certificate to the vessel, takes one or more of the following actions:
18 The portion of section 3 of these Regulations before paragraph (a) is replaced by the following:
Issuance of documents after inspection
3 A fee of $1,010 is imposed on a vessel for each day that one or more of the following documents are issued to the vessel or given to the vessel's master:
19 Sections 4 to 6 of these Regulations are replaced by the following:
Initial verification
4 A shipper who makes a request under paragraph 115.1(1)(a) or subsection 115.1(2) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $2,500.
Intermediate verification
5 A shipper who makes a request under paragraph 115.1(1)(b) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,250.
Renewal verification
6 A shipper who makes a request under paragraph 115.1(1)(c) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,250.
20 Sections 7 and 8 of these Regulations are replaced by the following:
Solid bulk cargo
7 An interested person who makes a request under subsection 116(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,500.
Packaged goods
8 An interested person who makes a request under subsection 162(1) of the Cargo, Fumigation and Tackle Regulations must pay a fee of $1,500.
Consequential Amendments
Cargo, Fumigation and Tackle Regulations
21 Subsections 116(3) to (5) of the Cargo, Fumigation and Tackle Regulationsfootnote 1 are repealed.
22 Subsections 162(3) to (5) of the Regulations are repealed.
Board of Steamship Inspection Scale of Fees
23 Paragraph 17(c) of the Board of Steamship Inspection Scale of Feesfootnote 2 is replaced by the following:
- (c) the inspection is not an inspection referred to in section 17.2 or 17.3 of these Regulations or in section 11 of the Marine Safety Fees Regulations.
24 Section 17.1 of the Regulations is repealed.
25 Paragraph 27(c) of the Regulations is replaced by the following:
- (c) the inspection is not an inspection referred to in section 17.2 or 17.3 of these Regulations or in section 11 of the Marine Safety Fees Regulations.
26 Paragraph 17(c) of the Regulations is replaced by the following:
- (c) the inspection is not an inspection referred to in section 11 or 12 of the Marine Safety Fees Regulations.
27 The heading after section 17 and sections 17.2 and 17.3 of the Regulations are repealed.
28 Paragraph 27(c) of the Regulations is replaced by the following:
- (c) the inspection is not an inspection referred to in section 11 or 12 of the Marine Safety Fees Regulations.
Repeal
29 The Port Wardens Tarifffootnote 3 is repealed.
Coming into Force
April 1, 2021
30 (1) Subject to subsections (2) to (4), these Regulations come into force on April 1, 2021.
Vessel Safety Certificates Regulations
(2) Sections 12 and 26 to 28 come into force on the day on which the Vessel Safety Certificates Regulations come into force.
April 1, 2022
(3) Sections 13 to 16 come into force on April 1, 2022.
April 1, 2023
(4) Sections 17 to 20 come into force on April 1, 2023.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
Executive summary
Issues: Some of the existing fees for inspection services provided by Transport Canada (TC) have not been adjusted in approximately 20 years, while other services have no fees associated with them at all. As currently set, the fee regime places heavy strain on TC resources to maintain the current level of service, and requires Canadian taxpayers to subsidize inspection services provided almost exclusively to foreign vessel owners. Regulations are needed to ensure that beneficiaries of services pay an appropriate share for those services. In addition, amendments are needed to ensure that fees for current inspection services are consolidated under a single set of regulations, thereby ensuring that fee payers are easily able to identify fees that are applicable to their circumstances.
Description: The Marine Safety Fees Regulations (the Regulations) will introduce 17 fees for five types of marine safety inspections. The fees will be indexed annually, based on the applicable Consumer Price Index published by Statistics Canada.
The Port Wardens Tariff will be repealed, and consequential amendments to the Cargo, Fumigation and Tackle Regulations and the Board of Steamship Inspection Scale of Fees will repeal references to existing marine cargo fees and Port State Control fees, because they will be replaced by the fees introduced in the Regulations.
Finally, the Vessel Pollution and Dangerous Chemicals Regulations will be amended to allow for the introduction of a new fee, and to align with Annex II of the International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL), and the Cargo, Fumigation and Tackle Regulations will also be amended to introduce a new fee.
Rationale: By implementing a modern fee regime that requires the beneficiaries of services to pay a greater portion of the costs for these services, the Regulations will promote a better balance between the financial burden borne by service recipients and by Canadians. With a modernized fee structure that adjusts for inflation in accordance with the Service Fees Act, TC can address future growth in demand and continue to meet its service standards. This approach will ensure that TC has the capacity to continue to incorporate and enforce future international safety requirements under International Maritime Organization Conventions or Codes.
The total cost of the Regulations is estimated at $8.87 million between 2021 and 2030 (present value, in 2019 Canadian dollars, discounted to 2020 at a 7% discount rate), of which $0.44 million will be incurred by domestic vessel owners and $8.43 million by foreign vessel owners. These costs to vessel owners will be used to recover the costs incurred by TC to provide marine cargo inspections, and therefore reduce the burden on Canadian taxpayers. However, only the cost to be incurred by foreign vessel owners ($8.43 million) will be considered a net increase in TC's cost recovery and a benefit to Canada; the costs to domestic vessel owners will be a shift of burden from Canadian taxpayers and therefore the impact will be neutral at the societal level.
Issues
The existing fees for some of the inspection services provided by TC have not been adjusted in approximately 20 years despite inflationary increases to the cost of wages, transportation, and equipment; updated requirements under international codes; and an increase in export volumes. In addition, some inspection requirements have no associated fees at all, leaving Canadians to bear the full costs of providing these services.
Inspection service fees are also spread out across multiple regulations and include a combination of fixed, hourly, and tonnage-based fees, which industry clients and stakeholders have indicated are complicated and unpredictable.
As currently set, the fee regime places a heavy strain on TC resources to maintain a consistent level of service, and requires Canadian taxpayers to subsidize inspection services provided almost exclusively to foreign vessel owners. The modernization of this fee regime through the making of these Regulations will better reflect the true cost to TC of providing these services and will simplify the fee structure for stakeholders and TC.
The Vessel Pollution and Dangerous Chemicals Regulations as well as the Cargo, Fumigation and Tackle Regulations will also need to be amended to allow for the introduction of new fees. These amendments will be addressed in the Regulations Amending Certain Regulations Made Under the Canada Shipping Act, 2001, which are included as part of this regulatory initiative.
In addition, the Vessel Pollution and Dangerous Chemicals Regulations require a minor update to clarify language in order to align with Annex II of MARPOL.
Background
Under the authority of the Canada Shipping Act, 2001, develops, TC implements and administers policies, regulations and standards necessary for the safe conduct of marine activities in a manner harmonized with international standards. As part of that mandate, marine safety inspections are undertaken, which include the following: (i) mandatory inspections for three higher-risk cargoes (i.e. grain, timber on deck, and concentrates for export to a place that is not within the limits of an inland voyagefootnote 4); (ii) inspections relating to solid bulk and/or packaged dangerous goods; (iii) verification of shippers' procedures for cargo that may liquefy; (iv) tank prewashing inspections; and (v) Port State Control inspections for foreign-registered vessels for ensuring compliance with various major international maritime conventions.
(i) Marine inspections for grain, timber on deck, and concentrates
The inspections for higher-risk marine cargoes are governed pursuant to the Cargo, Fumigation and Tackle Regulations. They ensure that the loading and carriage of cargo (the higher-risk cargoes) are done safely and in accordance with strict requirements.
Fees for these inspection services are currently set in the Port Wardens Tariff and the Board of Steamship Inspection Scale of Fees. Depending on the circumstances, fees can be fixed, hourly, and/or tonnage-based.
Marine shipping industries operate on tight deadlines. Cargo operations (loading and unloading) can happen at any time of day or night, and decisions regarding shore loading workers are often made on short notice, based on industry requirements at the time. All inspection services are provided 24 hours a day, 7 days a week and require a quick turnaround to avoid costly delays for stakeholders and industry. For this reason, TC marine inspectors are often on call, required to travel, and frequently asked to work overtime. Under the current fee regime, TC recuperates only 66% of the costs of these inspections.
(ii) Inspections relating to bulk and/or packaged dangerous goods
TC is responsible for the inspection of vessels on which dangerous goods in solid bulk and/or packaged form are loaded, carried or unloaded, such as ammonium nitrate-based fertilizers and explosives. For this activity, there are hourly fees defined in sections 116 and 162 of the Cargo, Fumigation and Tackle Regulations.
(iii) Verification of shippers' procedures
TC performs four different types of verification services of shippers' procedures for cargo that may liquefy to ensure compliance with the International Maritime Solid Bulk Cargoes Code (IMSBC Code), which is mandatory under the International Convention for the Safety of Life at Sea (SOLAS). Upon completion of the initial verification of the shippers' procedures, a letter of approval is provided to the shipper. Initial verification will ensure that the procedures comply with the provisions of the IMSBC Code, appropriate training is undertaken, and appropriate equipment is at the facility and/or the terminal as described in the procedures. An intermediate verification takes place no later than the first anniversary date of receipt of the letter of approval to review the procedures to ensure that there were no modifications. When a shipper modifies their procedures, a modification review by a TC inspector, similar to the initial verification, is required. A renewal verification is done at intervals specified by the authority of the port of loading, but cannot exceed five years.
Hazards can result from liquefaction and potential shifting of cargoes. Ensuring vessel stability and proper stowage and securing cargo during transport lead to safer operations and a safer workplace for seafarers. Proper cargo transport may also provide protection to the environment by avoiding potential cargo spills.
Verifications can be a costly and time-consuming process for TC inspectors, as they are required to review and approve the procedures established by the shipper regarding sampling, testing and controlling for the moisture content of cargoes that may liquefy. Currently, there are no fees associated with the services required to provide verification of shippers' procedures for cargoes that may liquefy, as it is a relatively new activity introduced in 2015.
(iv) Tank prewash inspections
Prewash services are for Canadian or foreign-flagged vessels that have unloaded a “Category X” noxious liquid substance at a port and intend to depart from the port of unloading. Before a vessel leaves the port of unloading, it is required to prewash the tank that held the noxious liquid substance and discharge the residues to a reception facility until the concentration level of the noxious substance is below the maximum allowable level, hence the term “prewash.” If residues of these substances are discharged into the sea from tank cleaning or deballasting operations, they are deemed to present a major hazard to either marine resources or human health and, therefore, it is prohibited to discharge them into the marine environment. The Vessel Pollution and Dangerous Chemicals Regulations provide the authority to conduct prewash inspections or grant exemptions as per Annex II of MARPOL. Vessels that contained “Category X” substances require a prewash operation prior to leaving the port of unloading or must be granted an exemption under the list provided in the Regulations. There are currently no fees associated with prewash inspections or inspections to confirm a prewash exemption. Exemptions to the prewash requirement can be given for reasons such as reloading with the same or compatible substance, washing to occur at another port with an appropriate reception facility, or using various other approved methods of dealing with cargo residues. Exempted vessels are still required to have a TC inspector verify necessary procedures and documentation to support the exemption.
In addition, Annex II of MARPOL requires Governments to determine whether a vessel can be exempted from prewash requirements. The Vessel Pollution and Dangerous Chemicals Regulations do not align with the MARPOL provisions in that they do not explicitly indicate that the exemption needs to be granted by a government official. Moreover, as a result of this omission, it is not clear who may decide that a vessel should be exempted.
(v) Port State Control inspections
Under the Port State Control program, TC inspects foreign vessels entering Canadian waters to ensure they comply with various international conventions. Canada is a signatory to several memoranda of understanding regarding Port State Control, including the Paris and Tokyo memoranda of understanding. Under such memoranda of understanding, Canada is obligated to inspect foreign vessels in Canadian waters using targeting methods to ensure that vessels meet certain standards, such as for the vessel's condition and number of personnel on board. Vessels may also be inspected for other reasons under Part 11 of the Canada Shipping Act, 2001, following accidents, incidents, sustained damage, pollution, etc.
Port State Control inspections require a marine inspector to board a foreign vessel entering Canadian waters to ensure the vessel meets the safety requirements of the major international maritime conventions and also has on board all required documentation. The international conventions that vessels need to comply with include SOLAS, the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, the International Convention for the Prevention of Pollution from Ships, the International Convention on Load Lines, the Convention on the International Regulations for Preventing Collisions at Sea, and the Maritime Labour Convention, 2006. There is no fee for an initial inspection, as it is considered a compliance inspection; however, fixed fees are currently found in the Board of Steamship Inspection Scale of Fees for follow-up inspections, including for the rescinding of a detention order.
Modernization
In winter 2018, TC undertook a comprehensive exercise to develop an informed costing of the Marine Cargo and Port State Control programs to establish appropriate inspection service fees. The costing approach adhered to the Treasury Board of Canada Secretariat's Guide to Cost Estimating and sought to establish defensible and transparent cost estimates. Costing for cost recovery purposes requires that the “full cost” of providing an activity be calculated. For cost-recoverable service fees, full cost is the allowable upper limit of the fee and represents the starting point for pricing decisions. A full cost estimate comprises all relevant resource costs incurred to deliver an activity or provide a service, including direct and indirect costs. The Marine Cargo and Port State Control costing exercise factored in salary costs, benefit plans, training and travel, office accommodations, internal support services, and information technology system development and maintenance costs. These costs were allocated to Marine Cargo and Port State Control activities and services based on resource consumption and level of effort.
The results of the costing exercise estimated that the full cost of administering the Marine Cargo program is $7.8 million annually. Of this cost, about $5.13 million is recovered annually via service fee revenue, which represents a 66% cost recovery rate. A “public-private benefit assessment” (PPBA), using a tool developed by the Treasury Board Secretariat, indicated that 90% of the benefits of TC's marine cargo inspection services accrue to the companies that receive the services. Such benefits include improved safety and the ability to participate in commercial activity. While pricing analysis for service fees requires many considerations, such as clients' ability to pay and comparison with fees in other jurisdictions, the degree of private benefit generated by a service is important when making pricing decisions.
The costing analysis further estimated that the full cost of delivering the Port State Control program is $8.97 million annually. Of this amount, about $0.2 million is spent on the follow-up inspections for which updated fees are being introduced; most costs are incurred to provide risk-based compliance inspections. The current cost recovery rate for follow-up inspections is 42%. The PPBA again indicated that 90% of the benefits of TC's revenue-generating Port State Control services accrue to the companies that receive the services.
These updates to the marine cargo fees are part of a broader plan to modernize the fee regime throughout TC. The Marine Safety and Security directorate's fee modernization initiative is being rolled out in phases, and the marine cargo fees are the first step in this initiative.
The larger modernization initiative will continue to update and incorporate marine safety fees into the comprehensive Regulations.
Objective
The modernization of the marine cargo fee regime will better reflect the actual cost to TC of providing inspection services and will simplify the fee structure for both industry stakeholders and TC. By implementing a modern fee regime that requires the beneficiaries of services to pay a greater portion of the costs for these services, TC is promoting better balance between the financial burden borne by service recipients and by Canadians. With a modernized fee structure that adjusts for inflation in accordance with the Service Fees Act, TC can address future growth in demand and continue to meet its service standards. This approach will ensure that TC has the capacity to continue to incorporate and enforce future international safety requirements under the conventions or the codes of the International Maritime Organization.
In addition, the updated fee regime will allow TC to continue to provide high-value services to the industry that contribute to the safety and security of vessels by ensuring that requirements set out under regulations and outlined in the applicable international codes are properly followed.
Description
The Regulations will repeal the Port Wardens Tariff, and introduce 17 fees for five types of marine safety inspections.
Repeals and consequential amendments
The Port Wardens Tariff will be repealed entirely, and consequential amendments to the Cargo, Fumigation and Tackle Regulations and the Board of Steamship Inspection Scale of Fees will repeal references to existing marine cargo fees and Port State Control fees, since they will be replaced with new fees in the Marine Safety Fees Regulations and Regulations Amending Certain Regulations Made Under the Canada Shipping Act, 2001.
The update and introduction of 17 fees for five types of marine safety inspections
In accordance with the Service Fees Act, the fees will be indexed annually, based on the applicable Consumer Price Index published by Statistics Canada. The inflation-adjusted fee levels and the date they will come into effect will be published in TC's Annual Fees Report, which is tabled in Parliament, and will be made available on the TC website.
Table 1A below shows the summary fee count and types of inspections. Tables 1B and 1C below show the fees for the five categories of marine safety inspections, as well as the phase-in schedule for the marine cargo inspection fees (i.e. marine cargo inspections, dangerous goods inspections and verification of shippers' procedures). The fees for these three activities will not be subject to a Consumer Price Index increase until the full fee amount is in place after the three-year incremental increase period.
| Summary fee count — Current versus new | Current number of fees | New number of fees |
|---|---|---|
| Marine cargo inspections | 38 | 2 |
| Inspections relating to bulk and/or packaged dangerous goods | 16 | 2 |
| Verification of shippers' procedures for cargoes that may liquefy | 0 | 3 |
| Tank prewash operations | 0 | 8 |
| Inspections of foreign vessels | 3 | 2 |
| Total fee count | 57 | 17 |
| Service | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Marine cargo inspections for grain, timber on deck and concentrates | |||
| 1. Fee for inspection | $616 | $682 | $750 |
| 2. Fee for document issuance after inspection | $834 | $923 | $1,010 |
| Inspections relating to bulk and/or packaged dangerous goods | |||
| 3. Packaged goods | $750 | $1,125 | $1,500 |
| 4. Bulk cargo | $750 | $1,125 | $1,500 |
| Verification of shippers' procedures for cargoes that may liquefy | |||
| 5. Initial verification or modification | $1,670 | $2,070 | $2,500 |
| 6. Intermediate verification | $835 | $1,035 | $1,250 |
| 7. Renewal | $835 | $1,035 | $1,250 |
| Service | Fee |
|---|---|
| Tank prewash operations | |
| Witnessing prewash |
|
| Prewash exemptions |
|
| Inspection of foreign vessels | |
| 16. Rescission of detention order | $4,200 |
| 17. Rectification of deficiency | $1,870 |
Marine cargo inspections for grain, timber on deck and concentrates
A total of 38 different inspection fee provisions related to mandatory marine cargo inspection for grain, timber on deck and concentrates that are currently spread out through the Port Wardens Tariff and the Board of Steamship Inspection Scale of Fees will be repealed and replaced by two new fees:
- (a) a fee for inspection of $750 on days when an inspector inspects the vessel to establish that the requirements for the issuance on the certificate have been met, travels to or from the vessel's location or, at the request of the vessel's authorized representative, is on call or made available for an inspection; and
- (b) a fee for document issuance after inspection of $1,010 when an inspector performs activities in relation to the issuance of a first certificate of readiness to load, a fitness to proceed certificate, or another written statement under subsection 119(5), 128(4) or 140(5) of the Cargo, Fumigation and Tackle Regulations.
This fee structure will allow TC to recover more of the costs of delivering marine safety inspection services.
Inspections relating to bulk and/or packaged dangerous goods
The Regulations will introduce a fixed fee of $1,500 for inspections relating to bulk and/or packaged dangerous goods pursuant to the requirements of the Cargo, Fumigation and Tackle Regulations, the Safe Container Convention Act and the Safe Containers Convention Regulations.
Verification of shippers' procedures
Currently, there are no fees associated with the services to provide verification of shippers' procedures for cargoes that may liquefy. The Regulations will introduce two new fixed fees for these services: a fee of $2,500 for an initial verification or a verification of modification of shippers' procedures; and a fee of $1,250 for intermediate or renewal of shippers' procedures verifications.
Tank prewash inspections
The Regulations will introduce a fixed fee of $3,075, plus an hourly rate if the inspection goes above 3.75 hours, for the service requirement for a marine inspector to oversee tank prewash operations or to verify that the owner/operator has followed the appropriate procedures and record keeping for the purposes of granting an exemption. Fees for tank wash inspections that are currently covered under the Board of Steamship Scale of Fees will be repealed.
Port State Control inspections
The Regulations will increase the existing fixed fees for Port State Control follow-up inspections and rescission of a detention order. A fee of $1,870 to perform a follow-up inspection for deficiencies that did not warrant detention of the vessel, and a fee of $4,200 to perform a follow-up inspection for the purpose of lifting a detention order against a vessel found in non-compliance.
Additional amendments
In addition to the modernization of marine cargo fees, this regulatory initiative will also include amendments to certain regulations made under the Canada Shipping Act, 2001, these being the Cargo, Fumigation and Tackle Regulations (CFTR), the Vessel Pollution and Dangerous Chemicals Regulations (VPDCR) and the Administrative Monetary Penalties and Notices (CSA 2001) Regulations. The CFTR will be amended in order to update the reference to the BC Code with one to the IMSBC Code, and to include the approval of shippers' procedures for bulk cargoes that may liquefy. The VPDCR will be amended to clarify the responsibility regarding prewash operations and to align with Annex II of MARPOL by clarifying that the Government is responsible for granting exemptions from prewash requirements for vessels previously loaded with a “Category X” noxious liquid substance. The Administrative Monetary Penalties and Notices (CSA 2001) Regulations will also be amended in order to align with these modifications (e.g. renumbering in the VPDCR).
Regulatory development
Consultation
TC has undertaken significant consultations on the overall marine safety fee modernization initiative, and specifically with respect to the fee modernization for the marine cargo program.
Presentations on the TC fee modernization plan were made at the national Canadian Marine Advisory Council (CMAC) meetings held in December 2017, May 2018, and November 2018, and at the regional CMAC meetings during the winter and spring of 2018. Additionally, focused stakeholder engagement sessions on the marine cargo fee proposal were held with stakeholders from the marine industry on June 11, 2018, and March 28, 2019, in Montréal, and June 20, 2018, and March 6, 2019, in Vancouver.
In general, participants support the fee structure for the marine cargo program and want to continue to explore ways to streamline inspection services and increase cost effectiveness. Stakeholders also requested advance notice prior to the implementation of the new regime.
Written comments were received from the British Columbia Chamber of Shipping, as well as the Shipping Federation of Canada and the Chamber of Marine Commerce. While both organizations were generally supportive of the overall proposal, a few concerns were identified. For example, both organizations recommended a 24-hour time frame rather than a cut-off at midnight for the daily fee, and a potential cap on the costs of marine cargo inspections for grain, timber on deck and concentrates. In response to the stakeholder concerns, TC has made some adjustments to the fee proposal. Among the changes was an adjustment to the ratio between the inspection fee and the document issuance fee and a cap for the document issuance after inspection fee. The fee for inspection was increased from $512 to $750 and the fee for document issuance after inspection has been reduced from $1,900 to $1,010 (the total for a day when a vessel receives a certificate will be $1,760). In addition, TC proposed to cap the number of fees for document issuance after inspection to a maximum of two per inspection interval (not including the issuance of a preliminary certificate). For example, in the winter, some vessels may require two inspections to confirm “readiness to load” because they have a “winter ballast” in one of their tanks to maintain the vessel's stability until cargo is loaded on board the vessel. A first inspection would be required while the ballast tank is full; and, after cargo is loaded and the ballast water has been removed, an inspection of the empty tank would be needed. In such a case, no fee would be charged for the second inspection. Similarly, TC proposed to charge one fee per day for document issuance after inspection — no matter the number of documents issued that day.
Stakeholders also raised concerns about being impacted by many government-wide fee modernization initiatives. In order to reduce the immediate impact of the fees, TC will be implementing the marine cargo inspection fees (i.e. marine cargo inspections, dangerous goods inspections and verification of shippers' procedures) gradually over a three-year period. The increase will be spread out evenly over the three-year period.
Port State Control and prewash service stakeholders overlap significantly with marine cargo service stakeholders. Thus, fee modernization plans for Port State Control follow-up inspections and prewash inspections were merged into the regulatory development and consultation plans for marine cargo services. A consultation was conducted by means of a letter, which targeted stakeholders that have a particular interest in the fee modernization of Port State Control and prewash services (i.e. shipping associations that represent the interests of the majority of owners, operators and agents of ships involved in Canada's world trade). During this consultation, affected stakeholders were given the opportunity to provide feedback on the proposed fee structure for Port State Control and prewash services. The consultation period was set for 30 days, from June 10 to July 10, 2020, and was extended by an additional 14 days at the request of the stakeholders.
No comments were received concerning the prewash operations activities. Regarding the Port State Control activity, questions were raised on how the costing, the pricing and the ratio of public versus private were determined. TC replied to these stakeholders and provided them with the requested information.
COVID-19 pandemic
Consultations with stakeholders on the proposed fees and fee increases continued in 2020 during the COVID-19 pandemic. No concerns were raised by stakeholders about potential impacts of the pandemic on the implementation of the proposed fees and fee increases during these consultations.
Prepublication in the Canada Gazette, Part I
The Regulations were prepublished in the Canada Gazette, Part I, on November 14, 2020, followed by a 60-day public comment period. One stakeholder comment was received in which general support for the Regulations was expressed. However, the stakeholder also (i) proposed that the fee increases be staggered over five years, instead of three years, considering the current COVID-19 context and the current challenges being faced by shipowners; and (ii) expressed concern that there seems to be little to no increase in service levels in light of the considerable fee increases for foreign shipowners.
TC recognizes the current challenges being faced by shipowners. The concern that fee increases generally could have a negative impact on the industry was brought to TC's attention on a number of occasions. The design of the Regulations reflected this stakeholder feedback by staggering fee increases over three years. TC considered staggering the fee increases over a longer period but, ultimately, determined that an additional two years would provide minimal economic benefits to marine operators and would add additional complexity to the regime. For these reasons, TC has not increased the phased-in approach from three years to five years.
In terms of the service levels, TC developed its service standards in accordance with Treasury Board Secretariat guidelines, pursuant to the Service Fees Act, of which one of the best practices is to “avoid identifying a performance target within the service standard.” Furthermore, the service standards for marine cargo activities are consistent with other government services. Finally, TC's service standards are based on factors that TC can control (e.g. the timing of the issuance of the document once the inspection is complete and/or satisfactory). TC is working on creating a baseline for when the new fees come into force and, once a substantive baseline has been established, will be open to revisiting its service standards in consultation with stakeholders.
Even though no changes will be made to the Regulations as a result of the stakeholder comments, some minor changes have been made to the Regulations since prepublication.
As part of the regulatory consultations prior to prepublication, TC proposed pre-payment for some of the services. The reaction from stakeholders was not favourable. They cited concerns around causing undue delays to the rendering of requested services. TC acknowledges these concerns and, as a result, the proposed pre-payment requirements have been removed from the Regulations. While TC continues to develop the capability of advanced payment systems, invoicing and payment of the fees in the Regulations will be done in accordance with current practices (i.e. the service is provided and the client is then billed by way of an invoice, by mail or email, after the conclusion of that service). The client then reviews and pays the invoice. In the case of late payments and/or non-payment, TC has policies and procedures in place to collect delinquent invoices (e.g. follow-up phone calls, emailing/mailing statements of account and, in some cases, leveraging collection agencies). Interest and penalties may also be applied depending on the circumstances.
Switching to pre-payment, as originally planned for some of the fees in this regulatory initiative, would reduce some of the current administrative burdens associated with non-payment and collection follow-ups, as mentioned above. However, because pre-payment was only envisioned for a very limited number of services in this regulatory initiative, namely the verification of shippers' procedures and the inspections relating to bulk and/or packaged dangerous goods, it is anticipated that the removal of the pre-payment requirement would have no material effect on TC's collection costs and, therefore, no impact on the cost-benefit analysis presented herein. Combined, these two services represent less than 20 inspections per year and cost TC about $50,000 per year. Given the relatively small volume of these two services when compared to the cargo inspection program in this regulatory initiative, it is reasonable to conclude that such a change in position (from requiring pre-payment at the prepublication stage to invoicing after the service is performed at the Canada Gazette, Part II, stage) would not increase costs for TC related to collecting payment for the fees in the Regulations.
Another amendment being made to the Regulations is the calculation of the time increment for prewash activities. Precision was needed to specify that the rounding up of the fee would be based on a quarter-hour rather than a full hour, and this will align with the policy intent and decision for these types of fees. This amendment was not addressed in the initial draft Regulations due to an oversight.
Finally, the last amendment being made pertains to the non-application clause. As the non-application clauses are typically found in the regulations to which they apply, they are being removed from the Regulations and will be inserted as a consequential amendment in the Board of Steamship Inspection Scale of Fees.
Modern treaty obligations and Indigenous engagement and consultation
In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, Transport Canada's Regulatory Stewardship and Aboriginal Affairs group completed an assessment of modern treaty implications that examined the geographical scope and subject matter of the amendments in relation to modern treaties in effect. No implications or impacts in regard to modern treaties have been identified.
Instrument choice
As currently set, the fee regime places a heavy strain on TC resources to maintain a consistent level of service, and requires Canadian taxpayers to subsidize inspection services provided almost exclusively to foreign vessel owners.
Regulations were chosen as the instrument to address this issue in order to simplify fee structures and better balance the financial burden of the service delivery costs between service recipients and taxpayers.
In addition, regulatory amendments are needed to ensure that fees for current inspection services are consolidated under a single set of regulations, thereby ensuring that fee payers are easily able to identify fees applicable to their circumstances.Although there are non-regulatory options, such as Service Level Agreements, that would meet most of the objectives of the Regulations, these were not chosen primarily to reduce the administrative burden on TC's clients. Setting fees by regulation is a standard approach used by governments worldwide and is well understood by TC's clients, both domestic and foreign. Continuing to set fees by regulation also offers a measure of cohesion between the current and new fee regime.
Regulatory analysis
The Regulations will increase the portion of marine cargo safety fees being paid by vessel owners. The total incremental cost to vessel owners will be $8.87 million. This includes incremental cost to domestic ($0.44 million) and foreign ($8.43 million) vessel owners.
The incremental costs to vessel owners will be used to recover the costs incurred by TC to provide these inspections, reducing the burden on Canadian taxpayers. For this reason, the incremental cost to vessel owners will be equal to the cost recovery amount received by TC.
Benefits and costs
Analytical framework
Benefits and costs associated with the Regulations are assessed by comparing the baseline scenario against the regulatory scenario. The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the Regulations. The regulatory scenario provides information on the intended outcomes as a result of the Regulations.
The Regulations will ensure that a greater portion of the total costs for marine safety inspection services are covered by the recipients of those services. Both domestic and foreign vessel owners will be affected, with foreign vessel owners bearing a greater portion of the total costs.
Following the Treasury Board Secretariat's Policy on Cost-Benefit Analysis, the scope of this analysis is at the societal level, analyzing costs and benefits attributed to Canadians. It is expected that the increased marine cargo fees will result in a rebalancing of costs from taxpayers to industry (i.e. foreign and domestic vessel owners). Incremental costs to foreign stakeholders will represent a net increase in the cost recovered by TC (since these costs will not be borne by Canadians). Therefore, costs to domestic vessel owners will have a neutral impact on Canadian society, while costs to foreign vessel owners are considered a benefit to Canadians.
The impacts of the Regulations were determined using data from a comprehensive exercise that established the appropriate costing of the Marine Cargo and Port State Control programs. This exercise was undertaken by TC's Cost Recovery Directorate. Further, the number of inspections per inspection type and the current fees associated with each inspection type were sourced from TC's financial and dispatching systems. Lastly, TC will periodically review activities for which fees are charged. These reviews will identify whether pricing for service fees needs to be revisited. Therefore, the risk of the costs of service delivery increasing faster than inflation, and resulting in the cost recovery program being underfunded, remains low.
This analysis estimated the impact of the Regulations over a 10-year period from 2021 to 2030. Unless otherwise stated, all costs are in present values, in 2019 Canadian dollars and discounted to 2020 at a 7% discount rate. It is important to note that fees presented in Table 1B (and Table 2 below) have been adjusted to 2019 Canadian dollars for the purposes of the analysis using the Conference Board of Canada's Consumer Price Index (CPI) Forecast. A detailed cost-benefit analysis report is available upon request.
Affected stakeholders
The modernization of the marine cargo fee regime will apply to Canadian and foreign vessel owners. According to TC's Navigation Safety and Environmental Program, an average of 1 624 marine cargo and associated inspections is performed per year. According to TC's Cost Recovery Directorate, the average number of inspections is an appropriate estimate for the future number of inspections, as the inspection levels are expected to continue at around the same level.
Based on the analysis of TC subject matter experts, 95% of vessels affected by the Regulations are foreign owned and 5% are Canadian owned.
Further, bulk carriers, predominately between 20 000 and 45 000 gross tonnage, are the main type of vessel that will be affected by the Regulations. The top commodities that these vessels transport are iron ore, crude oil, wheat, and fuel oil. TC expects only large companies, and no small businesses, to be impacted by the Regulations.
Baseline and policy scenarios
In the baseline scenario, vessel owners would pay the current fees associated with marine safety inspections, whereas the policy scenario assumes that the new increased marine inspection fees presented in the Regulations will be implemented.
As noted, TC's financial and dispatching systems indicate that TC conducts about 1 624 inspections per year on average. It is assumed that this average would hold over the next 10 years under both the baseline and the policy scenarios.
The baseline and policy scenarios for each marine cargo inspection are presented in Table 2, and briefly described below. Further, in Table 2, the various fees under the following inspection types have been aggregated given the similarities in cost under each of these inspections:
- inspections relating to bulk and/or packaged dangerous goods;
- verification of shippers' procedures; and
- tank prewash inspections.
Cost by type
Marine cargo inspections for grain, timber on deck and concentrates
The average cost to TC of performing a full marine cargo inspection is $5,309. Under the current fee structure, TC receives about $3,404 per full inspection. The Regulations will repeal 38 fee provisions under the current regulations and replace them with two new requirements:
- (1) a fee of $750 for an inspection when an inspector inspects the vessel to establish that the requirements for the issuance on the certificate have been met, travels to or from the vessel's location or, at the vessel's authorized representative request, is on call or made available for an inspection; and
- (2) a fee for document issuance after inspection of $1,010 when an inspector performs activities in relation to the issuance of a first certificate of readiness to load, a fitness to proceed certificate or another written statement under subsection 119(5), 128(4) or 140(5) of the Cargo, Fumigation and Tackle Regulations.
Inspections relating to bulk and/or packaged dangerous goods
The average cost to TC of performing an inspection relating to bulk and/or packaged dangerous goods is $2,891. Under the current fee structure, TC receives about $202 per inspection. This amount will increase under the Regulations, as a fixed fee of $1,500 for both bulk cargo and packaged dangerous goods inspections will be charged.
Verification of shippers' procedures
The average cost to TC of performing an inspection relating to an initial verification or modification verification of shippers' procedures is $3,338, and the average cost of performing an inspection related to an intermediate or renewal verification of shippers' procedures verifications is $1,669. Currently, there are no fees associated with these inspections. The Regulations will introduce a fixed fee of $2,500 for an initial or modification verification of shippers' procedures, and a fixed fee of $1,250 for an intermediate or renewal verification of shippers' procedures.
Tank prewash inspections
The average cost to TC of performing an inspection relating to the verification of international convention requirements is $4,396. Under the current fee structure, TC receives about $900 per inspection. This amount will increase under the Regulations, whereby a fixed fee of $3,075 will be charged per inspection, plus an additional hourly rate if the inspection takes longer than 3.75 hours.
Port State Control inspections
The average cost to TC of performing a follow-up inspection to verify rectification of deficiencies for the purpose of lifting a detention order is $4,680, and $2,080 when a follow-up inspection is required to verify rectification of deficiencies that did not lead to a detention order. Currently, TC receives about $1,900 for a follow-up inspection to verify rectification of deficiencies for the purpose of lifting a detention order, and $900 for a follow-up inspection to verify rectification of deficiencies that did not lead to a detention. The Regulations will introduce a fixed fee of $4,200 when a follow-up inspection is required to verify rectification of deficiencies for the purpose of lifting a detention order, and $1,870 when a follow-up inspection is required to verify rectification of deficiencies that did not lead to a detention.
A summary of the baseline and policy scenarios for each inspection type described above is presented in Table 2.
| Inspection type | Average annual inspections (2015 – 2018) | Baseline scenario | Policy scenario | |||
|---|---|---|---|---|---|---|
| Cost recovered per inspection | Cost recovery rate | Cost recovered per inspection table b1 note * | Cost recovery rate | Incremental cost | ||
| Marine cargo inspections for grain, timber on deck and concentrates | 1 508 | $3,404 | 66% | $750 table b1 note ** $1,010 table b1 note ** |
91% | $7.70M |
| Bulk/packaged dangerous goods inspection | 7 | $202 | 7% | $1,500 | 52% | $51.82K |
| Verification of shippers' procedures | ||||||
| Initial or modification verification of shippers' procedures | 4 | $0 | 0% | $2,500 | 75% | $60.96K |
| Intermediate or renewal verification of shippers' procedures | 5 | $0 | 0% | $1,250 | 75% | $38.10K |
| Tank prewash inspections | 23 | $900 | 21% | $3,075 table b1 note *** | 70% | $332.01K |
| Port State Control inspections | ||||||
| Port State Control inspection with a detention | 23 | $1,900 | 41% | $4,200 | 90% | $345.13K |
| Port State Control inspection without a detention | 54 | $900 | 43% | $1,870 | 90% | $340.28K |
| TOTAL COST | $8.87M | |||||
Table b1 note(s)
|
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Cost to foreign vessel owners
Foreign vessel owners are estimated to bear $8.43 million in incremental costs, which amounts to approximately 95% of the total costs.
As presented in Table 3, both Canadian and foreign vessel owners will be most impacted by marine inspections for grain, timber on deck and concentrates, and least impacted by inspections related to an intermediate or renewal verification of shippers' procedures.
| Inspection type | Domestic vessel owners | Foreign vessel owners | Total cost recovered |
|---|---|---|---|
| Marine cargo inspections for grain, timber on deck and concentrates | $384.99K | $7.31M | $7.70M |
| Bulk/packaged dangerous goods inspection | $2.59K | $49.23K | $51.82K |
| Verification of shippers' procedures | |||
| Initial verification or modification of verification of shippers' procedures | $3.05K | $57.91K | $60.96K |
| Intermediate or renewal verification of shippers' procedures | $1.91K | $36.20K | $38.10K |
| Tank prewash inspections | $16.60K | $315.41K | $332.01K |
| Port State Control inspections | |||
| When an inspection is required to verify rectification of deficiencies noted during a Port State Control inspection, for the purpose of lifting a detention order | $17.26K | $327.87K | $345.13K |
| When an inspection is required to verify rectification of any defect or deficiency, other than a deficiency that resulted in a detention order following a Port State Control inspection | $17.01K | $323.27K | $340.28K |
| TOTAL | $0.44M | $8.43M | $8.87M |
Benefits
As previously stated, the Regulations will result in a shift of cost burden from Canadians to vessel owners. The incremental cost recovery from the Regulations will be $8.87 million.
Costs to Canadian vessel owners will be considered a rebalancing of costs from Canadians to domestic vessel owners. Therefore, the total regulatory impact to Canada as a whole will be neutral. The rebalancing of costs from Canadian taxpayers to Canadian vessel owners will be $0.44 million.
Costs to foreign vessel owners will result in a net cost recovery to Canadians of $8.43 million. The cost to foreign vessel owners will be carried by non-Canadians, and, therefore, the transfer of burden from Canadian taxpayers to the foreign vessel owners will be considered a net increase in cost recovery, and a benefit to Canadians at the societal level.
Cost-benefit statement
- Number of years: 10 (2021 to 2030)
- Base year for costing: 2019
- Present value base year: 2020
- Discount rate: 7%
| Impacted stakeholder | Description of cost | Base year (2021) | Annual average (2022 – 2029) | Final year (2030) | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|
| Domestic vessel owners | Increase to marine cargo fees | $0.02M | $0.05M | $0.04M | $0.44M | $0.06M |
| All stakeholders | Total costs | $0.02M | $0.05M | $0.04M | $0.44M | $0.06M |
| Impacted stakeholder | Description of benefit | Base year (2021) | Annual average (2022 – 2029) | Final year (2030) | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|
| Transport Canada | Increase cost recovered by TC from marine cargo fees (from domestic vessel owners) | $0.02M | $0.05M | $0.04M | $0.44M | $0.06M |
| Increase cost recovered by TC from marine cargo fees (from foreign vessel owners) | $0.45M | $0.91M | $0.69M | $8.43M | $1.20M | |
| All stakeholders | Total benefits | $0.47M | $0.96M | $0.72M | $8.87M | $1.26M |
| Impact | Base year (2021) | Annual average (2022 – 2029) | Final year (2030) | Total (present value) | Annualized value |
|---|---|---|---|---|---|
| Total costs | $0.02M | $0.05M | $0.04M | $0.44M | $0.06M |
| Total benefits | $0.47M | $0.96M | $0.72M | $8.87M | $1.26M |
| NET IMPACT | $0.45M | $0.91M | $0.69M | $8.43M | $1.20M |
Qualitative impacts
The Regulations will better reflect the actual cost to TC of providing inspection services and will simplify the fee structure for both industry stakeholders and TC. By implementing a modern fee regime that requires the beneficiaries of services to pay a greater portion of the costs for these services, TC is promoting better balance between the financial burden borne by service recipients and Canadians. With a modernized fee structure that adjusts for inflation in accordance with the Service Fees Act, TC can address future growth in demand and continue to meet its service standards. This approach allows for inclusion of future international safety requirements under International Maritime Organization Conventions or Codes.
Sensitivity analysis
As previously described, a number of assumptions have been made to estimate the costs of the Regulations. To address the effect of uncertainty and variability on these assumptions, a sensitivity analysis is conducted, where variables are assigned different values, and outcomes are re-evaluated. A sensitivity analysis was performed on the following variables: analytical time frame and discount rates.
Analytical time frame
A 10-year analytical time frame was used for the central analysis, whereas the sensitivity analysis presents the results should a 20-year time frame have been used.
Discount rate
The central analysis used a 7% discount rate as recommended by the Treasury Board of Canada Secretariat. The sensitivity analysis presents the results should a 3% discount rate have been used, as well as if there was no discounting.
| Discount rate | 10-year time frame | 20-year time frame |
|---|---|---|
| 0% (undiscounted) | $13.01M | $27.26M |
| 3% | $10.96M | $20.00M |
| 7% | $8.87M table b6 note * | $13.96M |
Table b6 note(s)
|
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Distributional analysis
As mentioned previously, Canadian and foreign vessel owners will be impacted by the Regulations. While the exact number of impacted foreign vessels is not known, it is estimated that 95% of the costs will be carried by foreign-owned vessels, for a total of $8.43 million. Canadian vessel owners will carry the remainder of the 5%, for a total of $0.44 million. Table 8 provides a breakdown of the costs to foreign and Canadian vessel owners.
| Stakeholder | Percentage of stakeholders | Total cost |
|---|---|---|
| Foreign owned | 95% | $8.43M |
| Canadian owned | 5% | $0.44M |
| Total | 100% | $8.87M |
Small business lens
The small business lens does not apply, as there are no associated impacts on small businesses. None of the Canadian vessel owners that could be impacted have fewer than 100 employees or less than $5 million in revenue annually.
One-for-one rule
The one-for-one rule does not apply to the Regulations, as there is no incremental change in administrative burden on businesses. This regulatory initiative repeals an existing regulation and replaces it with a new regulatory title, which results in no net increase or decrease in regulatory titles.
Regulatory cooperation and alignment
The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum nor do they contribute to regulatory alignment between jurisdictions.
The marine cargo inspections provided by TC will ensure that ship operators comply with international requirements such as SOLAS and its associated Codes and Standards, and in particular, the International Maritime Solid Bulk Cargoes Code. In addition, the Port State Control inspections will ensure foreign vessels entering Canadian waters are in compliance with the major international maritime conventions.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
No gender-based analysis plus (GBA+) impacts have been identified for the Regulations. The Regulations are meant to ensure that the beneficiaries of inspection services pay a greater portion of the costs of these services, which will promote a better balance between the financial burden borne by service recipients and Canadians, regardless of sex, age, gender, ethnicity, culture, religion, language, etc.
Implementation, compliance and enforcement, and service standards
Implementation
The Regulations will come into force on April 1, 2021, with the exception of sections 12 and 26 to 28 of the Regulations, which will come into force on the day on which the Vessel Safety Certificates Regulations come into force. On this date, the new fee structure will take effect, and fees for marine cargo inspections, verification of shippers' procedures, and solid bulk and/or packaged dangerous goods inspections as shown in Table 1B above, under the “Year 1” column, will become payable. Changes to pricing in year 2 and year 3 will take effect on April 1, 2022, and April 1, 2023, respectively. Annual fee adjustments due to indexation to the Consumer Price Index will take effect one year after the implementation of the year 3 fees, or on April 1, 2024.
Also on April 1, 2021, the new fees for tank prewash and Port State Control inspections will become payable. Pricing for these fees does not change in year 2 or year 3, other than for adjustment due to indexation to the Consumer Price Index, which will take effect on April 1, 2022.
Fees will be invoiced after the delivery of the service. TC accepts a number of forms of payment, including online payment, electronic funds transfer, cheque, and in person at a TC Centre.
TC will develop guidance and explanatory materials for both the program and the industry to ensure that the new fees are applied consistently across Canada, and to ensure that stakeholders can clearly understand how and when the fees will be applied and what their responsibilities and liabilities will be under the revised regulations, prior to the Regulations coming into force.
Compliance and enforcement
Compliance with and enforcement of the marine safety requirements associated to the Regulations are already in place under section 210 of the Canada Shipping Act, 2001. With respect to payment of the fees under the Regulations, any fees owing will constitute a debt due to Her Majesty in right of Canada and may be recovered in any court of competent jurisdiction, in accordance with section 36 of the Canada Shipping Act, 2001 and the relevant provisions of the Financial Administration Act.
Service standards
TC is proposing to implement service standards associated to the new fees that will satisfy industry clients and ensure the availability of inspectors and the timeliness of inspection services, as shown in Table 9. TC expects to meet the service standards the vast majority of the time. In cases where a service standard is not met, a portion of the fee will be remitted to the client in accordance with the Service Fees Act, the Treasury Board Directive on Charging and Special Financial Authorities and the TC remissions policy.
| Type of inspection | Service standard |
|---|---|
| Cargo inspection | Issue a certificate or transcript, as applicable, within 24 hours of completing requested inspections. |
| Inspection of bulk and/or packaged dangerous goods | Issue certificate and/or transcript, as applicable, within 5 working days after completion of satisfactory inspection. |
| Verification of shippers' procedures fees: initial and modifications verifications and intermediate and renewal verifications | Issue a letter of approval within 10 business days after satisfactory completion of verification. |
| Tank prewash inspection | Endorse the appropriate entries in the relevant documentation within 24 hours of completing a satisfactory inspection. |
| Port State Control inspection | Issue a transcript, report or rescission of a detention order, as applicable, within 24 hours of completing inspection. |
Contact
Amélie Boutour
Senior Marine Safety Inspector
Navigation Safety and Environmental Programs
Marine Safety and Security
Transport Canada
Place de Ville, Tower C, 10th Floor
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Telephone: 343‑996‑9021
Fax: 613‑993‑8196
Email: amelie.boutour@tc.gc.ca